providing educational support for poor, disabled, and otherwise disadvantaged students.


We have reviewed the literature on whether and how money matters. That review makes it clear that additional funding for education will not automatically and necessarily generate greater student achievement and in the past has not, infact, generally led to higher achievement. Nevertheless, understanding of educational productivity is improving, both research and practice are increasingly informed by more sophisticated hypotheses about how to use resources effectively, and examples can be found of strategically chosen finance changes (sometimes involving reallocated funds, sometimes involving new monies, and frequently linked in a systematic way to other educational changes) that are making a difference.

While there is still much to learn about how to make schools better and how to deploy resources effectively, the committee is convinced that money can matter and that the lessons from research and practice make it increasingly possible to make informed school finance choices that make money matter for achieving educational objectives. The committee, as well as society, are less in agreement over the degree of confidence to have in particular strategies. While some are confident regarding which inputs make the best investments (for example, smaller class sizes or higher-quality teachers), others assert that what may be productive in one context may be less so in another. A key productivity challenge for the former group is how to ensure that those specific investments are made. For the latter group, a key challenge is to design incentives either through administered mechanisms such as accountability or financial bonuses and penalties or through market mechanisms such as school choice or private contracting—to encourage each school to make the types of investments that will be best for it given its particular situation.

One of the greatest challenges is how best to induce a productive use of resources in large urban districts serving disproportionate numbers of disadvantaged students. The productivity problems in these areas differ in some significant ways from those of suburban areas, and there appear to be no easy or simple solutions.


Despite the nation's almost continuous attention to education reform, which has been especially intense in the last quarter century, much remains to be learned about how to use resources most effectively to foster higher levels of learning for all children. Another National Research Council panel on education research recently pointed out (National Research Council, 1999) that the benefits of re-

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